10 mistakes that can void your insurance

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Some of us learn the hard way when we put in an insurance claim. What we thought we are automatically covered for, is denied.

Sometimes the reason is something we have overlooked or not updated in the policy over the years.

It could be some broken tiles on the roof that you've been meaning to fix, that can void an insurance claim for water damage after a storm. Or if you rent out your home as a short-term rental over the holidays without specific insurance for it, your claim isn't paid.

10 things that will void your insurance policy

Each insurer has different rules about what it does and does not cover. They are set out in the terms and conditions. Crucially they can void an insurance claim.

"It's really important that the insurance policy product disclosure statement is read and understood by policyholders and that the policy purchased suits their individual circumstances," according to a spokesperson from the Insurance Council of Australia (ICA).

Here are 10 common mistakes that void your insurance.

1. Failing to maintain your property

One of the main reasons why claims for damage at the time of an event such as a storm or flood is that an expert gives an opinion that your property was already damaged or in a poor state. It could be that the gutters are full of debris and haven't been cleaned out for some time. Or the broken roof tiles haven't been fixed and your home isn't watertight.

Other reasons are smoke alarms aren't working, window locks are broken or branches overhanging the home, rather than being cut back.

If you want to challenge the insurance company's view, then you will need competing evidence, possibly from an expert to contradict this. Afterall there can be defects in your home that you may not have been aware of.

2. Inadequate evidence of ownership

Claims assessors like to see evidence of ownership when something is stolen or lost. Without it, sometimes a claim is denied.

It is really useful to have these things to help prove ownership:

  • sales receipts
  • closeup photographs
  • the manufacturer's box
  • a certificate of authenticity
  • an original operating manual
  • a valuation
  • a full description,
  • proof of purchase.

3. Risky behaviour on holiday

Travel insurance can be voided for a whole range of reasons including excessive use of alcohol or use of illegal drugs that led to the claim, according to the ICA.

It says carelessness, leaving items unattended also can be viewed poorly by the insurer.

Also snow skiing without specific activity cover or motorbike riding or driving a car without a valid licence can void a claim.

4. Not disclosing the right information

You are under a duty to disclose all the relevant information when you take out insurance or renew your policy for health, home or car insurance. If you don't, your insurer may be able to reject your claim, saying you mislead them.

But, according to Legal Aid, Queensland, you aren't required to disclose something that you weren't aware of such as a poorly constructed roof that let water in. If you were unaware of the defect when you took out the insurance contract then the insurer cannot refuse the claim.

5. Not paying your premium

If you don't pay your insurance on time, not surprisingly your claim could be refused, and your policy could be cancelled. If you are prone to forgetting payments, put some reminders in your diary that your insurance is due.

When you pay your insurance, compare different insurers to make sure you are getting the best deal. And always consider the optional covers if they are necessary for your circumstances.

mistakes that can void your car travel insurance

6. Bald tyres

Old tyres need changing. It is important for not only your safety but for keeping your car insurance valid. The minimum legal tyre tread depth is 1.5mm in Australia.

Once it's below this, you could not only void your insurance, but also be fined. Check your tyre tread levels regularly to be sure your tyres are safe, and you are covered.

7. Don't leave your claim too long

Certain policies have a period of time for making claims. For example be sure to make your travel insurance claim within the specified 30 days of returning from your travel.

8. Don't leave your car keys in an obvious spot

Most vehicle insurance policies state drivers must take all reasonable steps to protect the vehicle from loss or damage, so don't leave keys in the ignition or on the tyre or the car unlocked. And don't store your spare key in the glovebox.

9. Driving under the influence of drugs or alcohol

Your car insurance will be invalid if you are driving over the blood alcohol concentration limit or under the influence of drugs. Always know what the legal limit is and stay under it.

10. Leaving your home vacant

If you are away from your home or holiday home for more than 60 days (durations depend on the policy), you may not be covered.

Contact your insurer to discuss the period of vacancy.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.